1. Newsroom
  2. Spotlight: China tightens modestly
Menu
Analysen 16.02.2017

Spotlight: China tightens modestly

Spotlight: China tightens modestly

What pitfalls and opportunities does this present?


China has tightened its monetary policy very modestly to curtail the growth of corporate leverage and more effectively price risk in money markets. Growth is unlikely to be impacted; it is sliding from 6.8% last year to 6.5% as stimulus abates. Similarly, the renminbi will continue to depreciate above 7.00 to the US dollar. For fixed income markets, long-dated onshore bond yields will rise and require investors to be selective in their exposure. Offshore issuance should increase as international rates are lower. In equities, higher yields and spreads make insurance and banks the beneficiaries. Infrastructure, property and consumer finance appear to be the sectors most at risk of a setback.

Discover our expertise on emerging equities

Key points

  • On Friday 3 February 2017 the Peoples’ Bank of China (PBoC) increased moneymarket interest rates for the first time in many years. This was aimed at moving administered interest rates closer to market-based rates without changing the benchmark lending rate. The era of rate cuts is at – or very close to – an end. China’s policy bias is no longer towards easing.
  • The impact will not slow the descent in GDP growth from 6.8% last year to 6.5% in 2017. Stimulation, if desired, could come from increases in funding available for banks to lend. Beijing will probably continue to allow USDCNH to rise (expected to breach 7.00). Beijing can also be expected to tighten rules on moving funds offshore ahead of the ruling party’s conference in the autumn.
  • These changes will introduce some opportunities for investors. Local currency bond yields will rise at longer maturities and possibly prompt more USD-denominated bond issuance. In equities, monetary tightening is bad for infrastructure but good for life insurance companies and the net interest margins of large state banks.

LOK Michael.jpg

Michaël Lok
Group CIO and Co-CEO Asset Management

Norman Villamin-1.jpg

Norman Villamin
CIO Private Banking

GAUTRY_Patrice_UBP_72dpi-9511.jpg

Patrice Gautry
Chief Economist

MCFARLAND Mark.jpg

Mark McFarland
Chief Economist, Asia

Expertise

Swiss & Global Equities

Why Swiss equities now? This market offers equity investors the stability and agility they need to navigate this volatile period. 

Read more
Expertise

European Equities

European equities offer unrivalled opportunities in terms of breadth of sector and market exposure.

Read more

Meistgelesene News

Analysen 01.10.2020

COVID-19: Die UBP hält Sie auf dem Laufenden

Seit dem Ausbruch des Coronavirus begleiten und unterstützen wir unsere Kunden während dieser ungewöhnlichen Zeit einer weltweiten Gesundheitskrise. Die Bank informiert Sie regelmässig über die Anpassungen ihrer Massnahmen an die von den Gesundheitsbehörden vorgegebenen Vorsichtsregeln. Ausserdem kommen unsere Experten zu Wort, welche auf die Auswirkungen der Pandemie auf die Weltwirtschaft und die Finanzmärkte eingehen.

Analysen 24.11.2020

Perlen im SMID-Cap-Segment in Europa und der Schweiz

Unternehmen kleiner und mittlerer Kapitalisierung verzeichnen oftmals höhere Wachstumsraten und Renditen als Grosskonzerne. Es ist einfacher, ein kräftiges Wachstum von einer kleineren Basis aus zu generieren. Die sogenannten SMID Caps bieten Anlegern eine Positionierung in langfristigen Wachstumstrends.

Analysen 17.12.2020

UBP Investment Outlook 2021

Schöne neue Welt


Auch lesenswert

Analysen 21.01.2021

Vaccines: Israel and the UAE show the way forward

With vaccines to combat the global pandemic being rolled out beginning in late-December, Israel and the United Arab Emirates (UAE) have led the world in vaccinating their populations, having reached > 20% coverage by mid-January.

Analysen 11.01.2021

The distinguishing features of impact investing

Impact investing is clearly differentiated from other sustainable investment solutions, but still takes ESG criteria into account.

Analysen 05.01.2021

Social & Affordable Housing

Over 1.1 million households in England are on local authority waiting lists for affordable housing. Furthermore, it is widely expected that waiting lists will lengthen as more households will be forced to seek cheaper accommodation due to the impact of COVID-19.